Leather bags and accessories major Hidesign has decided to forge a joint venture company in China where it plans to open 18 exclusive stores over the next two years, a company executive said on Thursday.
"The plan is to set up over the next two years about 18 stores in China starting with one at Hong Kong airport," the company's chief executive officer Kunal R Sachdev said in an interview.
Owning a majority stake, Hidesign, which had a humble beginning in 1978, would set up a 60:40 JV with a Chinese distributor Ray Chan, who already represents 'Fornarina' brand there.
He said the Chinese market is as big as India. There is a huge disposable income and "people are willing to loosen their purse strings" in that country, where they are looking for brands, and "they don't have access to all brands yet."
Sachdev also said Hidesign currently has 12 stores overseas and plans to add 23 more in foreign locations, including 18 in China, 4-5 in Russia and some in South Africa and the Middle East, over the next two-and-half-years.
"We are starting a retail store in Pretoria (South Africa) by year-end."
The company, which has it has 35 stores in India, has booked space in upcoming malls for 18 more stores which are expected to take off over the next 24-26 months.
The company expects to invest Rs 20-25 crore (Rs 200-250 million) for expansion activities in the next two-and-a-half-years, and the money would come by way of internal accruals, Sachdev said.
Responding to questions, he said the zero-debt company, which clocked a turnover of Rs 101 crore (Rs 1.01 billion) in 2005-06, growing at a compounded annual growth rate of 30-35 per cent in the last three years, is looking for a strategic partner and is ready to offer a minority stake.
"What we are looking for may be is a strategic alliance with an international partner who could help us accelerate our international presence much faster. . . help us open doors faster and get us into right spaces internationally," he said.
Sachdev said the idea is to induct an international partner who is also in the same retail space and who understands luxury marketing and has a significant footprint in key markets, which would help Hidesign leverage its current strength.
But he said Hidesign, whose product range includes a wide variety of briefcases, handbags, computer bags, garments, wallets, personal accessories, belts and desktop stationery accessories, would retain a majority stake and also brand rights.
Hidesign, which has a manufacturing facility in Puducherry, is struggling to maintain supplies to meet demand and is looking to outsource additional capacity to some of the units near its plant there. The production of handbags alone is aimed to be increased to 28,000 per month over the next one year from the current 18,000.
